(Reuters) - The business lobby and corporate defense lawyers want the 2nd U.S. Circuit Court of Appeals to stop the government from secretly rifling through companies’ virtual file cabinets.
Here’s the background. Last spring, U.S. District Judge Ann Donnelly of Brooklyn ruled that Microsoft was barred from telling one of its cloud computing customers – a multinational conglomerate – about a government warrant for the emails of two employees whom federal prosecutors in Brooklyn said were allegedly part of an international conspiracy to send goods to a foreign country that’s under U.S. sanctions for terrorism.
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The government did not want the corporation to know about the warrant and obtained a non-disclosure order under the Stored Communications Act, arguing that its investigation would be jeopardized if anyone at the company knew prosecutors had access to the two employees’ accounts. Microsoft – which, you may recall, has a long (and successful!) history of pushing back against government demands for secrecy over warrants for customers’ information – suggested limited disclosure. Perhaps, Microsoft suggested, it could tell a U.S.-based lawyer, officer or director at the company about the warrant. At a minimum, Microsoft said, it should be permitted to inform someone from the company of the warrant’s existence.
Judge Donnelly ruled that Microsoft can’t say a word to its cloud computing customer. She agreed with Microsoft that its First Amendment rights are at issue, and even that the government’s prohibition is subject to the highest standard of review, strict scrutiny. But the judge held that the gag order met that high standard. Based on ex parte evidence from prosecutors, she said there was a risk that other people at Microsoft’s client company might be involved in the alleged conspiracy.
Microsoft and its lawyers at Davis Wright Tremaine and Covington & Burling appealed to the 2nd Circuit, arguing that its customers own the data they store in the Microsoft internet cloud, just as they did when employee emails were stored in customers’ own hard drives and proprietary servers. Even in those days, the government had to tell companies when it obtained warrants for their records, Microsoft said. Targeted businesses could protect their rights, by, for instance, asserting attorney client privilege. But now, Microsoft said, prosecutors want to be able to obtain all kinds of corporate records from Microsoft and other cloud service providers without companies even knowing their records are in the government’s hands.
I suspect it will not surprise you to hear that trade groups representing U.S. businesses and a group of former prosecutors who now specialize in defending U.S. corporations agree with Microsoft. In amicus briefs docketed this week at the 2nd Circuit, the U.S. Chamber of Commerce, the Internet Association and other trade groups as well as 36 former New York federal prosecutors argued that new technology should not allow the government to sidestep old constitutional principles. (Amicus briefs backing Microsoft first turned up in the docket in late December and early January, as my Reuters colleague Sara Merken reported in a story about other cloud services companies appearing as Microsoft amici. But the redocketing of the Chamber and ex-prosecutors’ briefs brought them to my attention.)
The business lobby’s argument is twofold: U.S. companies that offer cloud computing services will be less competitive than foreign counterparts with prospective customers worried about prosecutors secretly grabbing their cloud-stored data; and U.S. companies may be less willing to take advantage of the efficiencies of cloud storage if they don’t want to expose their data to secret government warrants. So, as the brief explains, Microsoft’s appeal raises Fourth Amendment concerns for cloud storage customers who can’t defend against searches they don’t even know about and First Amendment issues for cloud service providers who can’t tell their customers that a warrant has been served.
“If moving information from a desktop computer or private server to the cloud results in reduced legal protection from government demands, then individuals and businesses naturally will be more reluctant to use this new technology,” the brief said. “These consequences make it critically important that courts strictly enforce legal limitations on the government’s ability to obtain data held in the cloud without the knowledge of the information’s owner.”
Three dozen former prosecutors – from longtime white collar defense lawyers such as Charles Stillman and Andrew Levander to lawyers who only recently left the government, such as Rachel Maimin and Brendan Quigley – emphasized that the criminal investigation underlying the Microsoft appeal has been underway since at least 2018 with no notice to Microsoft’s customer – not even, as Microsoft proposed, to a high-level, U.S.-based corporate official. Even acknowledging the government’s right to conduct secret surveillance, the former prosecutors said, the long-running gag order in this case is worrisome.
In typical corporate investigations, they said, targeted companies have an opportunity to contest government demands for information or to challenge information obtained in secret surveillance. Those same constitutional safeguards, they said, “should equally apply to searches of information maintained in the cloud.”
The Brooklyn U.S. Attorney’s office declined to comment on the amicus briefs or on Microsoft’s contention that it must be permitted to tell its customer about the warrant. The government’s reply brief is due on March 15.
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